Reportable IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.4977 OF 2009 (Arising out of SLP(C) No. 24123/2007)

Ajaya Kumar Das      …Appellants

Versus   State of Orissa & Ors.   …Respondents

JUDGEMENT

R.M. Lodha, J.

Leave granted.

2. The short question that arises for consideration in  

this appeal by special leave is : is the direction issued by the  

High Court that the pay fixation of the appellant and similarly  

situated persons be done in accordance with the Government  

Circular  dated  April  16,  1971  justified  or  the  pay  fixation  of  

these employees ought to be done as per Rule 74(b) of  the  

Orissa Service Code.

3. The controversy arises from the facts which may be  

briefly  noticed  first.  The  appellant  was  appointed  by  the  

Government  of  Orissa as Overseer  (Electrical)  on November  

16,  1964.  He  was  deputed  to  serve  in  the  Orissa  State  

Electricity Board (for short,  “OSEB”) in the then pay scale of  

185-00-325. Later on, the post of Overseer was re-designated  

as Sub-Assistant Engineer (for short, ‘SER’). The pay scale of  

SERs in OSEB was revised from time to time. Since scale of  

pay  of  SERs appointed  directly  by  the  OSEB was higher  in  

comparison to the Sub-Assistant Engineer on deputation with  

OSEB and who were initially appointed by the Government of  

Orissa as Overseers,  it  was decided to provide such  SERs  

(erstwhile Overseers)  reducible personal pay. This was done  

so that the SERs (erstwhile Overseers) like the  appellant and  

similarly  situated  persons  do  not  get  lesser  salary  in  

comparison to the SERs appointed directly by the OSEB. The  

appellant  was  promoted  to  the  rank  of  Assistant  Engineer  

(Electrical) in 1981 and at the time of promotion he was in the  

pay scale of 480-970 and drawing pay of  Rs. 874.  However,  

his pay in the promotional rank of Assistant Engineer  was fixed  

at Rs. 850/- per month. The appellant was aggrieved thereby  

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as,  according  to  him,  his  pay  should  have  been  fixed  on  

promotion at Rs. 950/- per month in view of Rule 74(b) of the  

Orissa Service Code (for short, “code”).

4. The appellant challenged his fixation of pay before  

the High Court of Orissa by filing Writ Petition but on formation  

of Orissa Administation Tribunal, the writ  petition came to be  

transferred to the Tribunal.  The litigation has chequered history  

but it is not necessary to go into that;  suffice it to say that the  

Tribunal by its Order dated December 23, 1999 directed that  

the appellant’s pay on his promotion to the rank of Assistant  

Engineer (Electrical) be fixed taking his last pay drawn in the  

rank of SER into account and following the provisions of Rule  

74(b)  of  the  Code.  This  is  how the  Tribunal  considered  the  

matter :

“Having bestowed our anxious considerations on the  submission of  the learned counsel  for  the applicant  and perused the relevant papers on record, we are of  the  opinion  that  annexure-6  decision  of  the  Government regarding protection of pay is in effect a  negative of the concept for pay protection. It was in  pursuance  of  Government  decision  that  though  recruited by the O.S.E.B they were promoted by the  Government to the rank of Assistant Engineer when  they were enjoying higher scale of pay than the Sub- Assistant Engineers under the Government. Since the  applicant was drawing pay at Rs. 874.00 per month in  the scale of pay of Rs. 480.00-970.00 he could not be  dragged to a lower scale of pay of Rs. 410.00-840.00  and  his  pay  was  fixed  at  Rs.  850.00  leading  to  

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reduction in his pay to the extent of Rs. 110.00 per  month.  This  can  hardly  be  called  protection  of  pay  which  is  sought  to  be  ensured  by  annexure-6  instruction to be unfair and unreasonable and direct  that the applicant’s pay on his promotion to the rank  of Assistant Engineer (Electrical) be fixed taking his  last pay drawn in the rank of S.A.E. into account and  following the provisions of  Rule 74(b)  of  the Orissa  Service Code and the differential  salary paid to him  within a period of 4 months from the date of receipt of  a copy of this order.”     

5. The State Government  being dissatisfied  with  the  

order  of  the  Tribunal  challenged  the  same  before  the  High  

Court. The grievance of the State Government before the High  

Court was that the Tribunal passed the order inconsistent with  

the Government Circulars, particularly the Circulars dated June  

18, 1982 and March 17, 1983.  

6. The High Court,   although noticed that the pay of  

the Government Servant cannot be reduced on promotion yet  

by relying upon the Government Circular dated April 16, 1971,  

directed that pay of the appellant in the next higher post, i.e.,  

Assistant Engineer was required to be fixed in accord with the  

said Circular.   The effect  of  the High Court’s  order  is  that  it  

reduces the scale of pay of the appellant. It is for this reason  

that the appellant has come up in appeal by special leave.

7. Rule 74(b) of the Orissa Service Code reads thus :

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“Where  a  Government  servant  holding  a  post  is  promoted or appointed to another post carrying duties  and responsibilities of greater importance than those  attached to the post held by him, initial pay in the time  scale of  the higher  post  shall  be fixed at  the stage  next above the pay notionally arrived at by increasing  his pay in respect of the lower post by one increment  at the stage at which such pay has accrued:

Provided  that  where  a  Government  servant,  immediately  before his promotion or  appointment  to  higher  post,  is  drawing pay at  the maximum of  the  time scale of the lower post, his initial pay in the time  scale of the higher post shall  be fixed at the stage,  next above the pay notionally arrived at by increasing  his  pay in  respect  of  the lower  post  by an  amount  equal  to  his  last  increment  in  the time scale  of  the  lower post:

Provided further that the provision  of this sub- rule  shall  not  apply  when  a  Government  servant  holding  a  class-I  post  is  promoted  or  appointed  to  another class-I post.”     

8. Rule 74(b) of the Code, thus, provides that on promotion  

of  a  Government  servant,  his  initial  pay in  the time scale of  

promotional post needs to be fixed at the stage next above the  

pay notionally arrived at by increasing his pay in respect of the  

lower post by one increment at the stage at which such pay has  

accrued. In a case where the Government servant immediately  

before his promotion has been drawing maximum of the time  

scale of the lower post, his pay on the promotional post needs  

to be fixed by notionally increasing his pay in respect of lower  

post by an amount equal to his last increment. In other words  

on promotion, a Government servant, by virtue of Rule 74(b),  

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gets higher pay than what he was getting immediately before  

his promotion.  Rule 74(b) of the Code is aimed at protecting  

the scale of pay of a Government employee in his promotional  

cadre  and seeks to  ensure that  in  no case an incumbent  is  

directed to receive less emoluments, less pay than what he was  

drawing prior to his promotion. This provision statutorily ensures  

that  the  State  Government  employee  gets  the  benefits  of  

receiving higher scale of pay than that of the post held by him  

prior to such promotion. Surely, in the light of Rule 74(b), initial  

pay in the time scale of higher post of a Government servant  

cannot  be  fixed  which  is  less  than  the  pay  he  was  getting  

immediately before promotion.

9. The Circular dated June 18, 1982 contemplates that  

the completed years  of service rendered by SERs under the  

OSEB should be treated as having been rendered under the  

Government in the Government scale of SERs and their pay in  

the  scale  of  Assistant  Engineers  under  the  Government  be  

fixed following the principle under Rule 74(b) of the Code. The  

aforesaid Circular was modified by a subsequent Circular dated  

March 17, 1983 whereby a clarification was made that in case  

of  promotion  of  SERs  of  OSEB  to  the  rank  of  Assistant  

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Engineer  under  Government,  if  the  pay  so  fixed  as  per  

principles laid down in the Government Circular dated June 18,  

1982 becomes less than the pay last drawn by them under the  

Board,  the  difference  may  be  allowed  to  them by  reducible  

personal pay to be absorbed in future increments.   

10.   Neither the Circular dated June 18, 1982 nor the  

subsequent Circular dated March 19, 1983 modifying the earlier  

Circular  dated  June  18,  1982  can  override  the  statutory  

provision contained in  Rule 74(b)  of  the Code if  it  results  in  

reduction of  pay of  the employee on promotion.  That  Orissa  

Service  Code  has  been  framed  under  Article  309  of  the  

Constitution  of  India  is  not  in  dispute.  It  is  well  settled  that  

Statutory  Rules  framed under  Article  309 of  the  Constitution  

can be amended only by a Rule or Notification duly made under  

Article 309 and not otherwise. Whatever be the efficacy of the  

Executive Orders or Circulars or Instructions, Statutory Rules  

cannot  be altered  or  amended by such Executive  Orders  or  

Circulars  or  Instructions  nor  can  they  replace  the  Statutory  

Rules. The Rules made under Article 309 of the Constitution  

cannot  be  tinkered  by  the  administrative  Instructions  or  

Circulars.

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11. Seen thus, upon promotion of the appellant to the  

rank of Assistant Engineer from SER,  his pay in the time scale  

of  Assistant  Engineer  has to  be fixed as  per  Statutory  Rule  

74(b), more particularly, in a situation such as the present one  

because by relying upon the Government Circulars dated June  

18, 1982 or March 19, 1983 or April 16, 1971, the appellant’s  

scale of pay gets reduced.

12. The  State  Government  has  not  challenged  the  

applicability of Rule 74(b) of the Code in the matter.  That being  

the position, the appellant’s pay has to be fixed in accordance  

with Rule 74(b) of the Code and not otherwise.   The view of the  

Tribunal,  therefore,  that  the  appellant’s  pay  be  fixed  on  his  

promotion to the rank of Assistant Engineer (Electrical) taking  

his last pay drawn in the rank of Sub-Assistant Engineer and  

following  the  provisions  of  Rule  74(b)  of  the  Code  being  

eminently just, proper and in accordance with law warranted no  

interference at the hands of the High Court.

13.  Appeal, accordingly, has to be allowed and is allowed.  

The  order  dated  March  2,  2006  passed  by  the  High  Court  

impugned  in  the  present  appeal  is  set  aside  and  the  order  

dated  December  23,  1999  passed  by  Orissa  Administrative  

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Tribunal is restored. The differential salary shall be paid to the  

appellant  now within  two months from today.  No order as to  

costs.

……………………J (Tarun Chatterjee)

…….……………..J         (R. M. Lodha)

New Delhi July 31,  2009.

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